Cavmont Capital Holdings Zambia Plc posted K15.7 million losses after tax during its financial half-year ending December 31, 2018, mainly triggered by increased impairment charges and operating expenses.
According to a consolidated statement of comprehensive income for the six months ending December 31, 2018, Cavmont incurred a K15.7 million loss during the financial half-year period compared to profit after tax of K282,000 during the corresponding period in 2017.
“The Group reported a loss of K15.7m for the six months ended 31 December 2018 (December 2017: profit of K0.3m). The performance of the Group has, however, been adversely impacted by increased impairment charges and operating expenses. Impairment charges for the period are higher mainly on account of the implementation of IFRS 9 on 1 July, 2018, which increased impairment provisions across the entire industry. The impact of IFRS 9 was material, reducing opening reserves on 1 July, 2018, by K53.3m and accounting for most of the K8.5m increase in impairment losses in the statement of comprehensive income,” Cavmont stated.
The bank’s operating expenses increased by nearly K20 million during the period under review mainly due to its investment in infrastructure and staff.
“Operating expenses increased by K19.5m year-on-year on the back of increased investment in infrastructure and in staff in order to upskill the Group’s workforce, which included the on-boarding of key new human capital resources as a performance enhancement strategy and to remain relevant within the industry,” it stated.
“Following an investment period of high expense growth, the expectation is for expenses growth rates to taper down in future as the Group now focuses on achieving operational efficiencies and improving business processes.”
Meanwhile, Cavmont recorded increased customer deposit growth during the six-month period under review to around K820 million.
“On the funding side, the Group recorded a 5.6 per cent growth in its customer deposits for the period to 31 December, 2018, closing at K820.0m compared to K776.1m as at 31 December 2017. The bank remains well capitalised with a capital adequacy ratio of 15.8 per cent as at 31 December, 2018. Regulatory capital exceeded the regulatory minimum of K104.0m for local banks by K36.6m on the reporting date,” stated Cavmont.
“While the operating environment remains challenging, the Group is in the process of executing its turn-around strategy. There is a focus on selective growth to improve the overall quality of the statement of financial position, while particular attention will be paid to operational efficiencies and recoveries and rehabilitation of Non-Performing Loans.”